US Dollar Short-term Outlook: USD Coils Below Resistance- Jobs Data Looms as Breakout Risk Builds
US Dollar is compressing just below a key resistance zone as traders brace for payrolls. A breakout here could define the next short-term trend. Battle lines drawn.
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US Dollar Index Technical Outlook: USD Short-term Trade Levels
- U.S. Dollar breaks November downtrend- weekly / monthly opening-range takes shape below key pivot zone
- The near-term focus is on a breakout from this range for directional guidance, with DXY holding above yearly-open support as the late-December advance consolidates.
- Breakout risk mounts heading into key jobs data with ADP & NFPs on tap
- DXY Resistance 98.68/76 (key), ~98.93, 99.38- Support 98.24 (key), 97.71/81, 97.02
The US Dollar is consolidating just below resistance, with DXY trading within a clearly defined weekly opening-range as traders position ahead of key labor market data. The late-December advance remains intact, but momentum has tightened into a narrow band, raising the risk for a breakout in the days ahead. Major US employment reports are on tap in the days ahead and the reaction to these data releases will be critical in determining whether the Dollar can extend higher or remain capped beneath resistance. Battle lines drawn on the USD short-term technical charts.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this US Dollar technical setup and more. Join live on Monday’s at 8:30am EST.
US Dollar Index Price Chart – USD Daily
Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Technical Outlook: In last month’s US Dollar Short-term Outlook we noted that a break of the September uptrend had shifted the outlook to the downside in DXY and that, “From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a drop towards 98.68- rallies should be limited to 99.40 IF price is heading lower on this stretch.” The index registered an intraday high at 99.31 in the following days before turning sharply lower with a decline of more than 2.6% rebounding off support on December 24 at 97.71/81- a region defined by the 2018 swing high and the 61.8% retracement of the September advance. The late-December rally faltered yesterday at former support and the focus now shifts to possible infection off this zone in the days ahead with the weekly & monthly opening-range taking shape just below. Look for a breakout to offer guidance here with key employment data this week likely to offer the catalyst.
US Dollar Index Price Chart – USD 240min
Chart Prepared by Michael Boutros, Sr. Technical Strategist; DXY on TradingView
Notes: A closer look at USD price action shows DXY breaking out of the November downtrend last week with the weekly opening-range taking shape just above the objective 2026 yearly open at 98.23. A newly identified ascending pitchfork converges on this threshold over the next few days and losses below this slope would threaten a test of key support at the 2018 high and the 61.8% retracement of the September advance at 97.71/81. A break / daily close below this threshold would be needed to mark resumption of the November downtrend towards the next support objective at the 2025 low-day close (LDC) near 97.02.
A topside breach / daily close above this key pivot zone would suggest a more significant low is in place and a larger trend reversal is underway. Subsequent resistance objectives are eyed at the 200-day moving average (currently ~98.93), the 61.8% retracement at 99.38, and the December high at 99.57- look for a larger reaction there IF reached.
Bottom line: DXY is trading within a well-defined weekly opening-range just below resistance- look for a breakout this week to offer guidance on the near-term directional bias. From a trading standpoint, losses should be limited to 98.23 IF price is heading higher on this stretch with a close above the 200-DMA needed to fuel the next leg of the late-December advance.
Keep in mind the ADP employment report is slated for tomorrow with the larger encompassing Non-Farm Payroll report on tap Friday. Stay nimble into releases and watch the weekly close here for guidance. Review my latest US Dollar Weekly Forecast for a closer look at the longer-term DXY technical trade levels.
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Active Short-term Technical Charts
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Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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